Colombian Peso Bonds Rally After S&P Bolsters Debt Outlook

Colombia’s peso bonds rallied the
most in two weeks after Standard & Poor’s said it put the
country’s credit rating under review for a possible increase,
buoying demand for the fixed-rate securities.

The yield on the government’s 10 percent peso-denominated
debt due in 2024 fell four basis points, or 0.04 percentage
point, to 6.60 percent at 9:44 a.m. in Bogota, set for its
lowest close since the securities were first issued in 2009,
according to the central bank.

Standard & Poor’s revised the outlook on Colombia’s credit
rating to positive from stable, the agency said in a statement
yesterday. Economic growth in the Andean country is increasing
government revenue and leading to lower debt levels, S&P said.

“The revision came as a surprise since not too long ago we
heard ratings agencies suggest that an improvement wasn’t likely
in the short term,” Camilo Perez, the head analyst at Banco de
Bogota, the nation’s second-biggest bank, said by phone.

The peso weakened 0.6 percent to 1828.73 per U.S. dollar,
paring this year’s gain to 6 percent, the fourth-best
performance among 170 currencies tracked by Bloomberg.

The peso is falling on speculation the government will
continue to intervene to keep the currency weak, Perez said.
Finance Minister Juan Carlos Echeverry said yesterday the
Treasury will buy “at least” $300 million dollars to stem
gains and avoid defeat in the so-called “currency war.”

“There’s alarm over whether dollar purchases will end,
continue or increase,” Perez said. Echeverry declined to say
how many dollars the government has already bought. The Treasury
will continue to buy dollars as long as it has the
“ammunition” to curb the currency rally, Echeverry said.